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Comex Gold Net Long Increases On Short Covering -- CFTC Data

(Kitco News) – Large speculators upped to their net-long positioning in gold on short covering but slightly trimmed their net length in silver during the week to last Tuesday, according to the most recent report on positioning from the Commodity Futures Trading Commission.

Activity was slightly mixed for the platinum group metals, with net long positions rising for palladium but declining for platinum. Large speculators also scaled back their net longs for the only base metal included in the report, copper.

All of the precious metals gained during the time period covered by the report — which was for the week through July 22—while copper fell. Comex August gold rose $9.20 during the reporting week to $1,306.30 an ounce as of July 22; September silver added 11.9 cents to $21.008. Nymex October platinum rose $3.30 to $1,488.30, while September palladium rose $6.30 to $874.85. Comex September copper dropped 4.15 cents to 3.2080 a pound.

Net long or short positioning in the CFTC data reflect the difference between the total number of bullish and bearish contracts. Traders monitor the data to gauge the general mood of speculators, although excessively high or low numbers are viewed by many as signs of overbought or oversold markets that may be ripe for price corrections.

The commission issues two reports each Friday — a so-called “legacy” report and a “disaggregated” report, started in 2009 and meant to offer more detail.

The most recent CFTC report, released late Friday, showed that money managers in the disaggregated report increased their net-long position to 136,120 contracts from 131,971 the week before. The non-commercials in the legacy report upped their net long to 166,696 contracts from 160,173.

In both instances, this occurred as the number of total short positions declined, suggesting short covering to offset positions in which traders previously had bet on weaker prices, or gone short. Money managers cut total shorts by 4,825 lots, while non-commercials trimmed gross shorts by 6,019.

“There was a little bit of fund covering that did happen. That purchasing generally was met by some commercial selling,” said Sterling Smith, futures specialist with Citi Institutional Client Group.

But overall, he said, the data reflect “no big changes” and a “quiet” market environment. “There was nothing of a market-moving or alarming nature.”

MKS (Switzerland) SA pointed out, however, that the Tuesday cut-off period for the most recent data was ahead of a selloff in gold prices to a one-month low on Thursday. This means there is a potential for the net long to have declined when the next report is issued, unless there is a bounce-back in the early part of this week.

In silver, meanwhile, the large speculators’ net long in both CFTC reports fell slightly from the prior week. Money managers cut net length to 46,221 contracts from 46,795, while non-commercials scaled back their net long to 51,006 from 51,799.

In this case, the declines occurred as the amount of long liquidation exceeded the amount of short covering. For instance, in the disaggregated report, money managers cut total shorts by 797 lots but scaled back longs by even more — 1,370. In the legacy report, non-commercials cut total longs by 1,195 lots, which was nearly triple the 402 decline in total shorts.

“Silver specs were chopped about and exited from longs and shorts,” said TD Securities.

There was a similar pattern in platinum as the long liquidation also outpaced the short covering. Money managers cut their platinum net long marginally to 41,541 lots from 41,636 as total longs fell by 468, slightly outpacing the 373-lot decline in total shorts. Non-commercials trimmed their net long to 48,971 from 49,452 as gross longs fell by 1,030, more than offsetting the 549-lot decline in total shorts.

“Platinum suffered with base metals on risk-off worries due to the heightened tensions with Russia,” TDS said.

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Meanwhile, large speculators upped their palladium net long slightly on fresh buying. Money managers in the disaggregated report bumped up their net length to 20,514 from 20,245 as total longs rose by 323. Non-commercials’ net long edged up to 24,070 from 23,517 as gross longs increased by 607.

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